Canada’s economy stands to see a boost of nearly seven percent, equivalent to $210 billion in real GDP over time, by eliminating internal trade barriers among its 13 provinces and territories, as per a recent report from the International Monetary Fund (IMF). The report suggests that barriers related to regulations amount to a national tariff of around nine percent on average. Particularly in service sectors like healthcare and education, where inter-provincial professional mobility is heavily regulated, this tariff could exceed 40 percent.
Comparatively, the United States’ average tariff rate on Canada was 5.9 percent in November 2025, as estimated by the Bank of Canada. The report highlights that smaller provinces and the northern territories bear a disproportionate impact from these internal trade barriers, leading to higher costs in contrast to larger provinces with more diversified economies.
The removal of trade barriers would benefit the Atlantic provinces the most, with Prince Edward Island potentially saving nearly 40 percentage points in real GDP per worker. The report emphasizes the economic inefficiencies and costs associated with these barriers, particularly in a service-intensive economy, urging for their elimination to enhance productivity, resilience, and inclusive growth.
Alicia Planincic, Director of Policy and Economics at the Business Council of Alberta, points out that due to these barriers, Canada operates more like ten separate economies rather than one cohesive unit. The impact of removing internal barriers would be more significant in smaller provinces reliant on inter-provincial trade, facilitating job opportunities and business expansions across regions.
While industries have long advocated for the removal of internal trade barriers, recent events like tariffs imposed by the U.S. prompted a closer look at intra-Canadian trade opportunities. Several provinces have taken steps towards barrier reduction through agreements, such as the recent federal-provincial agreement excluding alcohol and food from trade barriers. However, the report notes that services, a major component of internal trade costs, were largely untouched by these agreements, requiring further provincial action to address.
Planincic stresses the complexity and political will required to navigate the myriad rules and regulations governing internal trade, emphasizing the need for concerted efforts to align these regulations across provinces for smoother trade operations.
